The Real Jobless Rate Is 42 Percent? Donald Trump Has a Point, Sort Of

Donald Trump seems quite certain that the real unemployment rate is higher than the 4.9 percent that the Bureau of Labor Statistics has reported it to be. A lot higher.

“Don’t believe these phony numbers when you hear 4.9 and 5 percent unemployment,” Mr. Trump said in his victory speech after the New Hampshire primary Tuesday night. “The number’s probably 28, 29, as high as 35. In fact, I even heard recently 42 percent.”

Mr. Trump might be bombastic, but he’s not entirely wrong. And the ways in which he is wrong are actually useful for anyone who wants to understand how to make sense of economic data.

The truth is, there is no “true” unemployment rate. There are a nearly infinite multitude of ways to think about, and calculate, joblessness. The unemployment rate that is widely reported in the press on the first Friday of every month isn’t some manna from heaven, but rather a convention that has developed over the years that gives a partial — but still useful — view of the state of the labor market.

The B.L.S. itself reports six different unemployment rates, of which the one the press most commonly cites is called U-3, the third of the six options. But anyone with Microsoft Excel and access to B.L.S. and census data could dream up their own version.

So what’s in that 4.9 percent “official” unemployment rate? The numerator is Americans who are unemployed, the people who told a survey taker that they do not have a job but want one and have actively sought a job in the last four weeks. There were 7.8 million people in that category in January. The denominator is the total labor force, meaning people who either have a job or are looking for one; there were 158 million of those people.

It’s easy to see how you can get to a much larger unemployment rate if you change your definition for either of those numbers. Take the B.L.S.’s broadest definition of unemployment for example, known as U-6.

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Donald Trump said Tuesday night: “Don’t believe these phony numbers when you hear 4.9 and 5 percent unemployment. The number’s probably 28, 29, as high as 35. In fact, I even heard recently 42 percent.”CreditDamon Winter/The New York Times

U-6 includes not just those 7.8 million people who have actively sought work in the last four weeks, but also millions more who told a survey taker that they wanted a job and had looked for one in the last year, including those who say they’re discouraged by economic conditions, along with people who are working part time but would prefer a full-time job. That measure of unemployment was 9.9 percent in January (or 10.5 percent if you want to cast aside the “seasonal adjustment” process that smooths out normal seasonal variation).

But we don’t have to restrict ourselves to the calculations that B.L.S. has done for us. With a little creativity we can come up with other definitions of unemployment that yield an even higher number.

There are, after all, many millions of Americans who are of prime working age who are not working, not looking for a job, haven’t looked for a job in the last year and yet in a healthier economy may well prefer to work.

At the high point, in 1999, 84.6 percent of Americans 25 to 54 were working; now that is down to 81.1 percent. If we returned to the 1999 level, that would mean an additional 4.4 million working Americans. If we count those people — the missing workers — as unemployed, and tack them on to the definitions of unemployment included in U-6, we suddenly get to 20.1 million unemployed people and a 12.3 percent unemployment rate.

But back to Mr. Trump’s assertion that the true unemployment rate is more like 28 or 35 or 42 percent. Is there any plausible way to come up with a jobless rate at those kinds of levels?

As it happens, there is, and it’s right there near the top of the monthly jobless report. Only 59.6 percent of the United States population was employed in January. On the other side of that, a whopping 40.4 percent of the population is not employed.

If that is your definition of unemployed, well, yeah, the United States does have 40 percent unemployment. But keep in mind that this counts as unemployed every retiree, every college student, everyone who is unable to work because of a disability and every parent who voluntarily stays at home to raise a child.

But surely we can find a way to make the unemployment rate seem higher still, right?

I did some back-of-the-envelope math and came up with a way to get a jobless rate of about 53 percent! Instead of just including people 16 and above, the way the B.L.S. does, we could throw in those good-for-nothing children who are neither working, looking for work nor counted as part of the labor force.

Like my 2-year-old niece, Lilia, who if you ask me has had it too easy for too long. I just hope the job she finds in the Trump administration involves finger-painting.

Correction:

An earlier version of this article misstated the population used to calculate a 40.4 percent jobless rate via the Bureau of Labor Statistics. It includes people 16 and older; it does not include children.